Navigant Research Blog

Navigant Research’s recently published Navigant Research Leaderboard Report: Microgrid Controls is our first ranking of companies active in the microgrid market. The hardest part of this examination of innovators in this space was leaving so many market movers out, due to the focus on microgrid controls offered up by either developers or system integrators.

What if we were to turn the general assumption for the Navigant Leaderboard format on its head? In other words, why not create an apples-to-oranges listing? I am going to go out on a limb and highlight three companies not included in the Navigant Leaderboard report, but that deserve special mention due to their near-term impacts on the overall global microgrid market, regardless of what their role is. I have previously highlighted two companies, a utility (Commonwealth Edison) and an energy storage and smart grid innovator (S&C Electric) that were not included in the Leaderboard. Both were disqualified for inclusion because the ranking excluded utilities and vendors that primarily focus on energy storage integration.

Here are three other companies not included in the Leaderboard that I would like to highlight, for reasons explained below:

Energizing Company: Based in the Los Angeles area, Energizing Company is poised to announce one of the largest grid-connected microgrids in the world. The company sees its role as akin to a movie producer. (Well, what do you expect from a company based near Hollywood?) It doesn’t offer a controls platform and, though a private developer, sees utilities as its primary clients. It seeks to sponsor microgrids utilizing public-private partnerships. The company has fully embraced the concept of utility distribution microgrids with a plan for a microgrid to encompass an entire municipal utility’s service territory, optimized with smart grid technologies. It helps that the community this microgrid will serve is allegedly one of the smartest communities in the world (and I am not talking about IQ, but embedded infrastructure intelligence).

PowerStream: Ontario’s second-largest municipal utility, PowerStream, was the first utility in North America to announce a microgrid offering under a business model it refers to as DBOOME—design, build, operate, maintain, and energize. Perhaps the company’s most forward-looking project straddles what Navigant Research would identify as either a series of nanogrids or decentralized virtual power plants. Working with Sunverge—another company Navigant Research views as a microgrid leader—PowerStream will aggregate solar PV and lithium ion battery systems installed in residences in order to provide bidirectional value for customer and utility alike. The utility requires each customer to pony up some of their own money in return for long-term savings and exchanges of bidirectional energy services that serve both residence and utility grid.

Win Inertia: Among energy storage vendors active in the marketplace, Win Inertia is one of the most creative. Based in Spain, the company’s project portfolio highlights fascinating applications for hybrid battery solutions, including both alternating current and direct current (AC and DC) systems for electric vehicle (EV) charging, railways, harbors, buildings, islands or renewable integration for, of course, microgrids. Win Inertia has enjoyed 100% revenue growth since its inception and boasts a portfolio of over 15 microgrid-related projects either in operation or under development.

At last count, Navigant Research has profiled more than 50 active companies in the microgrid market, with none of them capturing more than 10% of the total market revenue. This is the status of the market today: there is no clear leader. The three companies profiled on this blog highlight the fact that innovation is coming from a variety of market players, each focused on a different part of the value chain.

Will one company emerge as the clear market leader? Only time will tell.

We finally have a more important scandal to discuss than air pressure in footballs. On September 18, the U.S. Environmental Protection Agency (EPA) laid out a case for a notice of violation against Volkswagen. The issue? Computer software within Volkswagen clean diesel vehicles that allows the cars to sense an emissions test and activate emissions controls. The vehicles then could easily pass stringent U.S. Tier 2, Bin 5 emissions standards. A Tier 2 vehicle must meet an average nitrogen oxide (NOx) emission slimit of 0.07 grams per mile. However, when the programmed vehicles were not under emissions testing, emissions controls were disabled and Volkswagen vehicles spewed up to 40 times that level of NOx emissions.

Immediate Impacts

In a matter of days, Volkswagen lost $17 billion in shareholder value as the company’s stock plummeted over 30%. Volkswagen recently became the largest car seller in the world, selling nearly 10 million vehicles globally in 2014. The automaker will face up to $18 billion in fines from the U.S. government and has also committed $7.3 billion toward recalling nearly 500,000 vehicles for the reprogramming necessary to comply with pollution standards. Volkswagen has also halted sales of affected 2015 models, and the EPA will not certify the company’s 2016 models.

While the U.S. market accounts for 6% of Volkswagen sales, the damage to the company’s environmentally responsible image is significant. Diesel vehicles account for over half of vehicle sales in Europe, and European government policies have made diesel fuels cheaper than gasoline. Emissions standards for diesels are also less strict in Europe compared to in the United States.

The U.S. Clean Diesel Market

Volkswagen TDIs represented nearly 30% of diesel sales in the U.S. market. Effective greenwashing campaigns by diesel automakers have created a reputation for diesel as a clean fuel source for our vehicles. Diesel has a higher energy density than fuel and diesel engines also operate more efficiently, so higher miles per gallon can be achieved. A clean image and a high fuel efficiency greatly increased the popularity of diesel models in the United States.

Whether arguing for or against diesel as a clean fuel source, it is important to discuss the emissions contents of diesel versus traditional fuel. Traditional fuel-burning vehicles give off higher yields of carbon monoxide and hydrocarbon emissions than diesel vehicles. These emissions are minimized by improved catalytic converter designs. Diesel vehicles emit more NOx, which in turn creates smog (ozone). The EPA is likely to take final action on stronger smog standards before the end of 2015. While diesel automakers utilize a variety of treatment systems to reduce NOx emissions, the Volkswagen scandal has significantly squashed the idea of diesel as a clean fuel source. How the public will respond to this breach of trust is yet to be seen.

Hybrid and Electric Vehicle Market growth

As the smog clears on the Volkswagen scandal, what opportunity is presented to hybrid and electric vehicles? As the image of clean diesel fades, the growing consumer base for fuel efficient and environmentally friendly vehicles is expected to turn toward hybrid and electric vehicles. With the disgrace of the country’s most popular diesel model and growing interest in electrification, the auto industry may soon see a significant restructuring.